Key takeaways

  • The 20.63% yield is an indicated, indicated figure as at mid-2026, not a forecast.
  • It is dominated by special dividends — including a 12-cent special in FY2025 and a 9-cent special in the December 2025 half.
  • The ordinary dividend is smaller (around 7 cents a year) and appears well covered by earnings.

A 20%-plus yield from a well-known non-bank lender looks like the kind of anomaly income investors dream about. Resimac Group (ASX: RMC) is that lender, and the figure is not a data error — but it is not what it seems either.

The reason RMC screens so high is that it has returned large amounts of surplus capital through special dividends on top of its ordinary payout. Understanding the split between recurring and one-off is the whole game here. This article does exactly that.

 

Company overview and business model

Resimac Group (ASX: RMC) is one of Australia’s larger non-bank lenders. It originates and services residential mortgages — from prime to specialist borrowers — and also operates in New Zealand and in asset finance (including commercial and SME lending). The group funds its lending largely through securitisation and wholesale funding programmes rather than a retail deposit base.

As a non-bank, Resimac competes with the major and regional banks as well as other non-bank lenders. Its profitability hinges on the net interest margin between funding costs and lending rates, on lending volumes, and on keeping credit losses low. As at mid-2026 the shares trade near A$0.86, for a market value in the vicinity of A$340–410 million.

 

Understanding the 20.63% indicated yield

For Resimac, that trailing sum has been swollen by special dividends.

In FY2025, Resimac paid roughly 19 cents per share in total: about 7 cents of ordinary dividends (a 3.5-cent interim plus a 3.5-cent final) and a 12-cent special. Then, for the half-year to December 2025, the board declared a 4-cent interim plus a further 9-cent special, both fully franked.

Pile those distributions into a trailing calculation against an 86-cent share price and you get an indicated yield around 20%. But most of that comes from specials — one-off returns of surplus capital — not the recurring dividend. On the ordinary payout alone, the yield sits closer to 7–8%.

 

Earnings, revenue and free cash flow

The first half of FY2026 (to December 2025) was strong. Reported revenue was around A$533 million (up modestly), while net profit after tax jumped roughly 110% to about A$28.5 million, with normalised net profit cited near A$39.7 million. The market reaction was notably positive.

A quirk of lenders is that reported free cash flow can look negative even in good years, because writing more loans consumes cash before it is recovered through securitisation and repayments. That is a structural feature rather than a distress signal, but it is worth understanding: RMC funds dividends from profits and capital, not from conventional “free cash flow.”

 

Dividend coverage and payout ratio

The ordinary dividend looks well supported. Analysts and data providers put the payout ratio on the ordinary dividend around 80%, comfortably covered by normalised earnings. That is the number income investors should anchor to.

The special dividends are a different matter. They are funded from surplus capital and are inherently non-recurring — dependent on capital position, strategic decisions and regulatory settings. Building an income plan around them would be a mistake.

 

Balance sheet, debt and liquidity

As a securitised lender, Resimac carries large on- and off-balance-sheet funding structures that are normal for the model. The willingness to pay sizeable specials points to a comfortable capital position. Nonetheless, funding availability and cost, warehouse capacity and the health of securitisation markets are central to the business. Precise capital ratios and net cash as at mid-2026 could not be fully verified here and should be checked in the latest results.

 

Industry outlook and growth drivers

Non-bank lenders compete on speed, service and access to borrowers the major banks may underserve. Falling or stable funding costs, healthy housing credit demand and disciplined cost control all support earnings. Conversely, aggressive bank competition, higher funding spreads or rising arrears would pressure margins. Resimac’s push in asset finance and New Zealand adds diversification but also execution risk.

 

Key risks to the dividend

  • Special dividends are one-offs and may not repeat.
  • Funding-cost and net-interest-margin pressure from competition or markets.
  • Credit risk — rising arrears or losses in a weaker economy.
  • Reliance on securitisation and wholesale funding markets.
  • Sensitivity to the housing cycle and interest-rate settings.

 

Bull case

Resimac is trading on a low earnings multiple after a profit surge, pays a well-covered, fully franked ordinary dividend, and has returned generous surplus capital. If earnings momentum continues and funding conditions stay benign, the shares could re-rate toward analyst targets around A$1.05–1.12, with income investors still enjoying a solid ordinary yield plus franking.

 

Bear case

If the market anchors on the inflated headline yield, disappointment is likely once the specials stop. A funding-cost squeeze, weaker housing credit or rising arrears could compress margins and cap the ordinary dividend, while the absence of conventional free cash flow makes the model sensitive to capital-market conditions.

 

Catalysts to watch

  • The FY2026 full-year result and dividend declaration.
  • Whether any further special dividend is announced.
  • Trends in funding costs and net interest margin.
  • Arrears and credit-loss data across the loan book.
  • Any strategic review, M&A or capital-management updates.

 

Conclusion

Resimac Group (ASX: RMC) is not quite the 20%-yielding gem the screener suggests. The eye-catching 20.63% figure is dominated by large, fully franked special dividends that are unlikely to recur every year. The underlying story — a profitable non-bank lender paying a well-covered ordinary dividend of around 7 cents with franking — is genuinely attractive on its own terms. Just size your expectations to the recurring payout, and remember dividends are not guaranteed and can be reduced, suspended or cancelled.